Saturday, January 14, 2012

Taxing Fuel Rods: The Vermont Legislature Plans Another Law Which Will End Up in Court

The Vermont legislature is facing the fact that the Clean Energy Development Fund will cease to be funded when Vermont Yankee stops paying into it in March. This fund has paid part of the costs of many a solar panel and wind turbine. For the Vermont legislature, watching this funding go away is painful! Replacing this tax with another tax on Entergy is an important goal of the legislature, even mentioned by Governor Shumlin in a press conference that was mostly about recovering from Hurricane Irene.

So, the legislature coming up with another way to make Vermont Yankee pay into the clean energy fund. House bill H479 plans to tax spent fuel. The legislature must think these fuel rods are very valuable, because t they plan to raise tens of millions of dollars a year taxing them!

As usual in Vermont, this is almost certainly going to end up in court. The proposed bill H479 talks about nuclear plants in Vermont (plural). But there is only one plant. A tax aimed at only one company is usually illegal. However, as I pointed out in my post about the "Entergy must pay Vermont's Costs in the Lawsuit law, the Vermont legislature passes bills are illegal, unconstitutional, and can't be enforced. These bills make the faithful feel good. "We're doing something, even if it won't actually work."

The bill has two parts: a tax on fuel rods (amount unclear, perhaps $15 million a year) and a state-required decommissioning fund. The state-required fund ("post-closure funding tax") would require contributions of $25 million a year.

Howard Shaffer has an excellent post on this bill, which was published at True North Reports yesterday. His post: H479 Analysis: The Power to Tax is the Power to Destroy. Here's a quote from Howard:

Opponents have already circulated a petition to towns and cities within 20 miles of the plant, requesting support for a tri-state Decommissioning Oversight Committee. They intend to meddle, as they have elsewhere in New England. Their “contribution” consists of trying to get ridiculously low levels of radioactive contamination as cleanup standards. This has resulted in hauling off multiple truckloads of demolished concrete that pass granite boulders along the road that are more radioactive than the cargo.

Image of dry cask storage from NRC student information area.


Anonymous said...


I'm not sure that the fact that VY is currently the only nuclear plant in Vermont would exempt it from all possible legislation by the State on nuclear plants.

However, I see what I think is a bigger problem with the law - I'm no lawyer, but if Vermont passed such a bill, wouldn't all *currently existing and already purchased fuel rods* be exempted? That is, Entergy made the decision to purchase those fuel rods, some of them decades ago, some of them years ago.

To suddenly drop a surprise tax on them on past actions/decisions seems like it would violate the Constitutional prohibition on retroactive laws? So, it would seem like they could only tax any *new* spent fuel rods?

I mean, let's apply this concept to fossil fuel plants. How would the courts view a law which says, retroactive for the last 100 years, everyone has to pay a carbon emissions tax on every ton of carbon they've ever emitted? I don't think States are allowed to do that, are they?

So, such a law would only have any point if the plant is continued to allow running, no?

Anonymous said...

Followup to my previous comment - I just had an idea of what the point may be. Even if the law can only apply to new fuel rods which Entergy purchases after the date of enactment of the law, the point might be that if Vermont can't shut down the plant by Fiat, they can shut it down by making it so obnoxiously expensive and uneconomical to run a nuclear plant in VT that Entergy chooses to shut down the plant instead of paying those costs?

I mean, imagine a state where any business has to face a huge tax - like a 25$ tax on every hamburger sold by a restaurant - hamburger joints in such a state would shut down over night, or change their business (it's easier for a restaurant to change menus than for a nuclear plant to change).

Meredith Angwin said...

Jeff. I am not a lawyer either. I think you are right on both counts. My feeling is this law is illegal, it smells funny to me. It may be because it is targeting one industry, or because it is retroactive.

The good news is I think Vermont is doing this because they feel they may lose in court. The bad news is that they may well be able to tax the plant out of existence.

Also, I think the clean-up portion of the law has a higher chance of standing up in court than the fuel rod tax. States can make stronger environmental regulations than federally required. Car emissions in California are a well-know example. Less well known is that the NRC requires a plant to emit only 100 millirems a year radiation, measured at the fence line, but Vermont requires 20 millirems at the fence line. VY complies with that, though it has been a source of controversy, due to the difficulty of measuring such a low amount (20 millirems per year measured on a daily basis in a state with a lot of granite lying around).

Mike Mulligan said...

How come we never get down to the crux of the problem that causes this...the perceived mistrustful behavior of Entergy across states?

I can make a case it is the mistrustful dominant ideology of the nuclear industry?

Meredith Angwin said...

Mike. You are making a case for taxing the nuclear industry out of existence because you don't trust them.

Do you think the same of the oil, gas, and coal industries? Do you trust them more than the nuclear industry? Or should they be taxed out of existence also? Just asking.

Mike Mulligan said...

Nope, I am saying there is a good reason why a corporation should be perceived by our population as truthful and honest.

I am saying across the board in our energy is a grave national security economic should be required and strictly enforced that all business talk and energy advocation has to give full disclosure and completely truthful. Energy is like the lying business and government systems that brought us the economic collaspe of 2008 and 2009. They are all thieves and liars. Either you tell the truth so help you god, or you go to jail. This is the housing and the financial sector in the lead up to 2008 and 2009...and everyone has gotten away with lying about energy for billions of dollar for decades...

The planet on a widespread bases now is in a spiritual crisis with being truthful to their neighbors, most of us are not truthful and honest to ourselves even.... and not wanting to perceive lying and untruthfulness all around us.

And all of our current and future energy limitations and global warming issues are wholly dependant withthe bottom 99%ers having the income to purchase the energy of our wants, needs and aspirations....everything is based on income.

Mike Mulligan said...

I would frame the pro and anti nukes as mirror images of each other...they are all in it for themselves and the truth doesn't matter any more.

Matter of fact, i see it today as they are energy producers, energy drug pushers or advocators...they would rather sabotage their competitive brothers and our nation to boost energy prices than serving our nation

Kit P said...

I do not trust elected official. I think for good reason too. Could we tax then out of existence too.

Just asking!

There was a city in California that made modernizing a NG power plant too expensive. City officials were stunned when the $10 million in tax revenue dried up.

Pete said...

It seems to me that if the state incurs some cost because these fuel rods exist, then the state could legitimately tax them. Just because the plant may be shut down, there is still an emergency plan for the fuel in the spent fuel pool, and probably also for the dry casks. Vermont needs to participate in that emergency plan.

But I have no doubt that Vermont will want to tax Entergy much more than the cost the state actually incurs.

The best solution could be to move the rods to another, more friendly state. Entergy has plants in Mississippi, Nebraska, Arkansas, Louisiana.

Paul said...

For Mike Mulligan: When was the last time you asked a wind farm or solar PV array operator to make publically available their actual power produced and the price that it was sold for? Good luck, because they will tell you that it's "Proprietary information". A person can find out the info via the FERC databaase, but it's only updated quarterly and usually in monthly or quarterly increments, so you can't see the inherent variability of the power source.

You are all about big, bad Entergy, but meanwhile the "renewable" (aka unreliable) power producers pick up Section 1603 grants and Section 1705 loan guarantees with the gov't paying the risk premium. Homeowners get 30% federal tax credits and (some) state tax credits, exemptions from sales taxes in some states, plus they get paid retail rates for spot production of electricity AND get to keep the RECs. I don't see you railing against the renewable energy standards that raise electricity rates for everyone in the state, especially your so-called 99%.

IMO, any utility that is required by a state RES/RPS to generate/buy a certain percentage of "renewable" power needs to break that cost out in their power bills so that every ratepayer can see what "renewable" power is really costing them. If the utility is paying retail rates for wholesale spot power from distributed energy sources (aka net metering) and/or being required to buy RECs, then that cost needs to be another line item on each bill, along with the statement, "This amount is your share of how much XYZ Utility is required to pay to your neighbors for their solar power."

Mike Mulligan said...

I been calling them lying green energy for many year now...I think they are way worst than the nukes. They are and have destroyed our response to global warming...the lot of them don't warrant any credibility what-so-ever.

It is just a function how corrupt and unregulated the whole energy sector is the heart of the 1%ers.

I these so called green anti nukes want nothing to do with me...I call the lot of it envy power of the rich.

Steven Berger said...

I understand how governments tax assets. How do you tax a liability?

I think Entergy should encourage them to pass the law and then not pay. What's Vermont going to do? Foreclose on the spent fuel? Perfect solution. Let Shummy figure out what to do with it. He has all the answers.

Atomikrabbit said...

Looks to me like a Bill of Attainder.

Definition: A legislative act that singles out an individual or group for punishment without a trial.

The Constitution of the United States, Article I, Section 9, paragraph 3 provides that: "No Bill of Attainder or ex post facto Law will be passed."

The loony Vermont Legislature is tilting at windmills again, getting ready to squander more taxpayer money on legal fees. Be sure Entergy will challenge it all the way to the Supremes. But in Montpelier it’s all about the Feel Good, isn’t it?